Debt Investor Presentation - June 14, 2019
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Debt
Investor
Presentation
June 14, 2019
DISCLAIMER
IMPORTANT: THIS PRESENTATION IS NOT AN OFFER OR SOLICITATION OF AN OFFER TO BUY OR SELL SECURITIES. IT IS CONFIDENTIAL AND IS TO BE USED FOR
INFORMATIONAL PURPOSES ONLY.
YOU MUST READ THE FOLLOWING BEFORE CONTINUING: Important notice
This presentation (including any oral briefing and any question-and-answer session in connection with it) (the “Presentation”) is for informational purposes only and is provided on a
confidential basis. Disclosure of the information contained in this Presentation to any other person or any reproduction of this information, in whole or in part, without the prior
written consent of Sodexo (the “Company”) is prohibited and is furthermore subject to the terms of any confidentiality agreements entered into. This Presentation is not intended to,
and does not constitute, represent or form part of any offer, invitation, inducement or solicitation of any offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose
of, any securities. It must not be acted on or relied on in connection with any contract or commitment whatsoever. It does not constitute a recommendation regarding any securities.
This Presentation is only being provided to persons outside the United States in accordance with Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities
Act”). By attending this Presentation or by reading the Presentation slides, you warrant and acknowledge that you fall within this category. No securities of the Company have
been, or will be, registered under the Securities Act.
This Presentation does not purport to be comprehensive or to contain all of the information that a person considering the purchase of the securities or providing any other
indebtedness contemplated by the proposed transactions may require for a full analysis of the matters referred to herein. Any purchase of securities in the offering should be made
solely on the basis of information contained in the offering memorandum to be published in respect of the offering. This Presentation is based on historical information provided by
the Company’s management and advisers or taken from third party sources none of which has been independently verified. There is no guarantee of the accuracy or completeness
of such data. The information contained within this Presentation is subject to change without notice, it may be incomplete or condensed, and it may not contain all material
information concerning the Company’s and its affiliates and/or connected parties.
None of the Company, it subsidiaries, affiliates, associates, or their respective directors, officers, partners, employees, representatives or advisors (collectively, the “Company’s
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implied, contained herein or otherwise made available is or shall be relied upon as, a promise, warranty or representation, whether as to the past or the future and no reliance, in
whole or in part, should be placed on the fairness, accuracy, completeness or correctness of such information or views. In particular, past performance cannot be relied on as a
guide to future performance. None of the Company’s Representatives has independently verified the material in this Presentation. Nothing herein should be construed as financial,
legal, tax, accounting, actuarial or other specialist advice.
This presentation has not been approved by an authorised person in the United Kingdom and is for distribution only to (i) persons who are outside the United Kingdom, (ii) persons
who have professional experience in matters relating to investments who fall within the definition of “investment professionals” in Article 19(5) of the Financial Services and Markets
Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”); (iii) high net worth entities, and other persons to whom it may otherwise lawfully be communicated, falling
within Article 49(2)(a) to (d) of the Order or (iv) persons to whom an invitation or inducement to engage in an investment activity (within the meaning of Section 21 of the Financial
Services and Markets Act 2000) in connection with the issue or sale of any securities may otherwise lawfully be communicated or caused to be communicated (all such persons
together being referred to as “Relevant Persons”). This presentation is directed only at Relevant Persons and must not be acted on or relied on in the United Kingdom by persons
who are not Relevant Persons. The distribution of this presentation in other jurisdictions may be restricted by law and you should inform yourself about, and observe, any such
restriction.
2 June 14, 2019 – London Investor Presentation
DISCLAIMER
IMPORTANT: THIS PRESENTATION IS NOT AN OFFER OR SOLICITATION OF AN OFFER TO BUY OR SELL SECURITIES. IT IS CONFIDENTIAL AND IS TO BE USED FOR
INFORMATIONAL PURPOSES ONLY.
YOU MUST READ THE FOLLOWING BEFORE CONTINUING: Important notice
These materials have been prepared by the Company and have not been verified, approved or endorsed by any lead manager, bookrunner, arranger or underwriter retained by the
Company and no representation or warranty, express or implied, is made or given by or on behalf of them or any of its subsidiary undertakings, or any of such person's respective
directors, officers, employees, agents, affiliates or advisers, as to, the accuracy, completeness or fairness of the information or opinions contained in this presentation and no
responsibility or liability is assumed by any such persons for any such information or opinions or for any errors or omissions.
This Presentation is not a prospectus for the purposes of the European Union’s Directive 2003/71/EC, as amended or superseded.
PRIIPS Regulation / Prohibition of sales to the European Economic Area (the “EEA”) retail investors: The securities referred to herein are not intended to be offered, sold or
otherwise made available to and should not be offered, sold, or otherwise made available to any retail investors in the EEA. For these purposes, a retail investor means a person
who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU, as amended ("MiFID II"); or (ii) a customer within the meaning of a customer
within the meaning of Directive (EU) 2016/97, as amended, where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II.
Consequently no key information document required by Regulation (EU) No 1286/2014, as amended (the "PRIIPs Regulation") for offering or selling the securities referred to herein
or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the securities referred to herein or otherwise making them
available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.
MiFID II professionals/ECPs only target market: The target market assessment in respect of the securities referred to herein has led to the conclusion that the target market of the
securities referred to herein is eligible counterparties and professional clients only (each as defined MiFID II).
This Presentation may include unpublished price sensitive information that may constitute “insider information” for the purposes of any applicable legislation and each recipient
should comply with such legislation and restrictions and take appropriate advice as to the use to which such information may be lawfully put. The Company’s Representatives do
not accept any responsibility for any violation by any person of such legal restrictions under any applicable jurisdictions.
Cautionary note regarding forward-looking statements
Statements in this Presentation describing the objectives, projections, estimates and expectations of the Company and its direct and indirect subsidiaries (collectively, the “Group”)
may be “forward-looking statements” within the meaning of applicable securities laws and regulations. “Forward-looking statements” include, without limitation, statements preceded
by, followed by or including the words “aims”, “anticipates”, “believes”, “could”, “expects”, “intends”, “may”, “targets”, “would” or other similar expressions or the negative thereof.
These views are based on a number of assumptions and are subject to various known and unknown risks, uncertainties and other facts which in some cases are beyond our
control. Such forward-looking statements are not guarantees of future performance and no assurance can be given that any future events will occur, that projections will be
achieved or that the Group’s assumptions will prove to be correct. Actual results could differ materially from those expressed, implied or projected, and the Group does not
undertake to revise any such forward-looking statements to reflect future events or circumstances.
3 June 14, 2019 – London Investor Presentation
FORWARD-LOOKING INFORMATION
This presentation contains statements that may be considered as
forward-looking statements and as such may not relate strictly to
historical or current facts.
These statements represent management’s views as of the date
they are made and Sodexo assumes no obligation to update them.
Figures have been prepared in thousands of euro and published
in millions of euro.
Alternative Performance Measures:
please refer to Appendix for definitions
4 June 14, 2019 – London Investor Presentation
AGENDA
1. Sodexo at a Glance
2. Fiscal 2018 Highlights
3. H1 Fiscal 2019 Highlights
4. A Solid Business Model
5. Transaction Overview
6. Appendices
5 June 14, 2019 – London Investor Presentation
SODEXO AT A GLANCE June 14, 2019 – London Investor Presentation
SODEXO KEY FIGURES
Sodexo at a glance
€20.4bn revenues
▪ Founded in 1966 by Pierre Bellon and still controlled by
the Bellon family
460,000 employees
19th Largest private
employer worldwide
100 million consumers
served daily
72 countries
€15bn
market Strong Investment
capitalization
Grade S&P “A-/A-1”
April 10, 2019
7 June 14, 2019 – London Investor PresentationOUR MAJOR STRENGTHS
Sodexo at a glance
A unique range of
Significant
Quality of Life Services
Independence market
particularly well aligned
potential
with evolving client demand
A robust
Undisputed
A global network financial model A strong culture
leadership in
covering that allows Sodexo and engaged
developing
72 countries to self-finance its teams
economies
development
8 June 14, 2019 – London Investor PresentationSODEXO’S DEVELOPMENT – MORE THAN 50 YEARS OF HISTORY
Sodexo at a glance
1966 1983 2005 2016 2018
Sodexo 1971 - 1978 Michel Landel Sophie Bellon Denis Machuel
IPO of Sodexo on Paris
founded by International becomes CEO, Pierre becomes becomes third
stock exchange
Pierre expansion Bellon remains Chairwoman of CEO in the
starts 1985 - 1993 Chairman of the Board the Board of Group’s history
Bellon
Service International of Directors Directors
Vouchers 2009
development:
launched Americas, Russia, Sodexo reviews its
South Africa & Asia strategic positioning
1995 1998-2001 2011-2016 2017-2019
2007-2010
Sodexo Marriot Services Puras do Brasil, Refocus on Food:
Gardner Centerplate, US
Acquisitions
US VR Brazil Brazil
Merchant, UK Score Groupe and Crèche Lenôtre, France Morris, Australia,
Partena 2001 Attitude, France Roth Bros, US Novae, AiP, The Good
Sweden Sogeres France Zehnacker, Germany MacLellan, India Eating Company
Wood Dining Services US Comfort Keepers & Motivcom, UK PHS build up:
Circles, US Inspirus US Pronep Brazil, Crèche
RKHS, India PSL, UK de France
the Good Care Group
9 June 14, 2019 – London Investor PresentationINTEGRATED QUALITY OF LIFE SERVICES OFFER
Sodexo at a glance
9 June 14, 2019 – London Investor PresentationA UNIQUE OFFERING: 3 ACTIVITIES TO IMPROVE QUALITY OF LIFE
Sodexo at a glance
On-site Services Benefits and Rewards Personal and Home
Services Services
➢ Foodservices ➢ Employee Benefits ➢ Childcare
o Resident Dining, Retail,
➢ Incentive and ➢ Home Care
Hospitality, Food
Procurement Recognition programs ➢ Concierge services
➢ Facilities Management ➢ Expense Management
o Hard FM: Technical
➢ Public Benefits
Maintenance, Asset, Energy
and Project Management. ➢ Consumer Gifting
o Soft FM: Cleaning, Security,
Front of house, Support
Services.
➢ Integrated services,
combining all of the above
11 June 14, 2019 – London Investor PresentationFISCAL 2018 REVENUE BREAKDOWN
Sodexo at a glance
Distribution
Revenue by segment by geographic region
(1) Including Personal Home Services
11 June 14, 2019 – London Investor PresentationREGULAR AND SUSTAINED PERFORMANCE
Sodexo at a glance
25,000 Revenues (in € millions) Operating Profit (in € millions)
+4.1% CAGR over 10 years 1,200
+3.7 % CAGR over 10 years
20,000
1,000
15,000 800
600
10,000
400
5,000
200
0 0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Operating Cash flow (in € millions) 800 Net Income (in € millions)
1,200
+6.2% CAGR over 10 years +5.6% CAGR over 10 years
1,000 600
800
600 400
400
200
200
0 0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
13 June 14, 2019 – London Investor PresentationSHARE OWNERSHIP
Sodexo at a glance
OF WHICH 24% USA
14 June 14, 2019 – London Investor PresentationFISCAL 2018 HIGHLIGHTS June 14, 2019 – London Investor Presentation
FY2018 IN LINE WITH REVISED GUIDANCE
Fiscal 2018 Highlights
Revised guidance FY2018 Results
Organic revenue growth Organic revenue growth
of between 1 and 1.5% at 2.0%
(excluding 53rd week impact) (excluding 53rd week impact)
Underlying operating Underlying operating
profit margin around profit margin
5.7% at 5.7%
(excluding currency effects) (excluding currency effects)
16 June 14, 2019 – London Investor Presentation * Please refer to Appendices for Alternative Performance Measures definitionsORGANIC GROWTH IN LINE WITH REVISED GUIDANCE
Fiscal 2018 Highlights
Group On Site Services
FY2018 Q4 Board days shift from Q3 to
+1.9% +3.3% Q4 in Universities in North
Excluding 53rd week Excluding America as expected
53rd week
+2.0% -1.1% +4.5% Good summer tourism
Excluding North America excl. North America in France
53rd week
Benefits & Rewards Services
+1.6%
Published FY2018 Q4
+5.1% +7.6% Brazil pick-up in H2
+2.4% +7.5% India recovery in Q4
Latin America excl. Latin America
17 June 14, 2019 – London Investor Presentation * Please refer to Appendices for Alternative Performance Measures definitionsPERFORMANCE IN THE P&L
Fiscal 2018 Highlights
CHANGE
At current Excluding
€ millions FY 2018 FY 2017 exchange rates currency effect
Revenues 20,407 20,698 -1.4% +4.4%
Underlying Operating profit 1,128 1,340 -15.8% -8.6%
Underlying Operating margin 5.5% 6.5% -100 bps -80 bps
Other Operating income and expenses (131) (151)
Operating profit 997 1,189 -16.1% -8.3%
Net financial expense (90) (105)
Effective tax rate 27.1% 31.7%
Underlying net profit group share 706 822 -14.1% -8.6%
Basic Underlying Earnings per Share 4.77 5.52 -13.6%
Group net profit 651 723 -9.9% -4.0%
Basic Earnings per Share 4.40 4.85 - 9.4%
18 June 14, 2019 – London Investor Presentation * Please refer to Appendices for Alternative Performance Measures definitionsSOLID CASH FLOW
Fiscal 2018 highlights
€ millions
FY2018 FY2017
Operating cash flow 1,140 1,076
Change in working capital1 221 120
Net capital expenditure (286) (308)
Free cash flow 1,076 887
Net acquisitions (697) (268)
Share buy-backs/ Treasury stock (300) (300)
Dividends paid to parent company shareholders (411) (359)
Other changes (including change in Financial Assets, scope and exchange rates) (316) (164)
(Increase)/decrease in net debt (648) (204)
1 Excluding change in financial assets related to the Benefits & Rewards Services activity (-€228m in Fiscal 2018 and -€134m in Fiscal 2017).
Total change in working capital as reported in consolidated accounts: in Fiscal 2018: -€7m = €221m - €228m and: in Fiscal 2017 -€14m = €120m - €134m
19 June 14, 2019 – London Investor Presentation * Please refer to Appendices for Alternative Performance Measures definitionsSTRONG CASH CONVERSION
Fiscal 2018 Highlights
165%
123% 123%
98% 93%
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018
20 June 14, 2019 – London Investor PresentationROBUST BALANCE SHEET AND RATIOS
Fiscal 2018 Highlights
€ millions
August 31, 2018 August 31, 2017 August 31, 2018 August 31, 2017
Non-current assets 7,944 7,416 Shareholders’ equity 3,283 3,536
Current assets
4,628 4,531 Non-controlling interests 45 34
excluding cash
Restricted cash
615 511 Non-current liabilities 4,330 3,885
Benefits & Rewards
Financial assets
427 398 Current liabilities 7,622 7,419
Benefits & Rewards
Cash 1,666 2,018
Total assets 15,280 14,874 Total liabilities & equity 15,280 14,874
Gross borrowings 3,940 3,500
Net debt 1,260 611
Operating cash totaled €2,680 million1, Gearing ratio 38% 17%
of which €1,987 million related to
Benefits and Rewards Services Net debt ratio 1.0 0.4
(net debt/EBITDA)
1 Cash – Bank overdrafts of €28m + Financial assets related to BRS activity
21 June 14, 2019 – London Investor Presentation * Please refer to Appendices for Alternative Performance Measures definitionsFINANCIALS STRICTLY UNDER CONTROL
Fiscal 2018 Highlights
Strong Free Cash Flow Solid Balance sheet Share buyback program
€1.1bn 165% 1.0 38% €300m
FREE CASH FLOW CASH CONVERSION NET DEBT RATIO GEARING
FY18 Net Acquisitions Underlying EPS Dividend maintained
€697m 2.9% €4.77 €2.75 58%
SPEND SCOPE CHANGE DIVIDEND OF UNDERLYING
NET PROFIT
22 June 14, 2019 – London Investor Presentation * Please refer to Appendices for Alternative Performance Measures definitionsFIRST HALF FISCAL 2019 HIGHLIGHTS
ORGANIC GROWTH SLIGHTLY ABOVE EXPECTATIONS
First Half Fiscal 2019 Highlights
Group On-Site Services
H1 FY2019 Continued improvement in North America
H1 FY2019
from +0.2% in Q1 to +2.4% in Q2
+2.8% Business & Administration is growing but
+3.1% still impacted by lower revenues in Govt &
+1.2% +4.1%
North America excl. North America
Agency and high last year comparative base
Organic growth in Energy & Resources
Benefits & Rewards Services
+7.3%
Published H1 FY2019
+10.1% Strong recovery in Brazil
+12.5% +8.2% Solid growth in Europe
Latin America Europe, USA, Asia
24 June 14, 2019 – London Investor Presentation * Please refer to Appendices for Alternative Performance Measures definitionsENCOURAGING EVOLUTION OF OSS GROWTH INDICATORS
First Half Fiscal 2019 Highlights
Client retention Comparable unit growth Business development
+40 bps +20 bps +70 bps
97.8%
97.4%
+2.5% 3.0%
+2.3% 2.3%
H1 2018 H1 2019 H1 2018 H1 2019 H1 2018 H1 2019
25 June 14, 2019 – London Investor PresentationUNDERLYING OPERATING PROFIT IN LINE WITH EXPECTATIONS
First Half Fiscal 2019 Highlights
Underlying Operating Profit Underlying Operating Margin
+3.3% At constant rates -20 bps
647
627 6.1% 5.9%
H1 2018 H1 2019 H1 2018 H1 2019
26 June 14, 2019 – London Investor Presentation * Please refer to Appendices for Alternative Performance Measures definitionsSOLID FINANCIALS
First Half Fiscal 2019 Highlights
CAPEX up strongly Tax rate in line
€205m 1.9% 70% 28.8% LAST YEAR REDUCED
BY EXCEPTIONNALS
CAPEX CAPEX / REVENUES OF THE INCREASE IS
IN EDUCATION AND SPORTS &
LEISURE
Net Acquisitions Solid Balance sheet
€234m 3.7% 2% – 2.5% 1.3 45%
SPEND SCOPE CHANGE ESTIMATED SCOPE CHANGE NET DEBT RATIO GEARING
FOR FY2019
27 June 14, 2019 – London Investor Presentation * Please refer to Appendices for Alternative Performance Measures definitionsPERFORMANCE IN THE P&L
First Half Fiscal 2019 Highlights
CHANGE
At current Excluding
€ millions H1 FY 2019 H1 FY 2018 exchange rates currency effect
Revenues 11,045 10,293 7.3% +6.8%
Underlying Operating profit 647 627 +3.1% +3.3%
Underlying Operating margin 5.9% 6.1% -20 bps -20 bps
Other Operating income and expenses (69) (73)
Operating profit 578 554 +4.2% +4.1%
Net financial expense (54) (44)
Effective tax rate 28.8% 25.9%
Underlying net profit group share 413 397 +4.1% +4.3%
Basic Underlying Earnings per Share 2.84 2.67 +6.2%
Group net profit 364 372 -2.3% -2.6%
Basic Earnings per Share 2.50 2.51 -0.4%
28 June 14, 2019 – London Investor Presentation * Please refer to Appendices for Alternative Performance Measures definitionsROBUST CASH FLOW
First Half Fiscal 2019 Highlights
€ millions H1 FY2019 H1 FY2018
Operating cash flow 648 650
Change in working capital1 (428) (402)
Net capital expenditure (205) (123)
Free cash flow 14 125
Net acquisitions (234) (674)
Share buy-backs/ Treasury stock 12 (49)
Dividends paid to parent company shareholders (403) (411)
Other changes (including change in Financial Assets, scope and exchange rates) 32 (43)
(Increase)/decrease in net debt (579) (1,052)
1 Excluding change in financial assets related to the Benefits and Rewards Services activity (+€55m in H1 Fiscal 2019 and €(73)m in H1 Fiscal 2018).
Total change in working capital as reported in consolidated accounts: in H1 Fiscal 2019: €(373)m = €(428)m+ €55m and in H1 Fiscal 2018 €(475)m = €(402)m+ €(73)m
29 June 14, 2019 – London Investor Presentation * Please refer to Appendices for Alternative Performance Measures definitionsRETURN TO NORMAL CAPEX LEVEL IN H1
First Half Fiscal 2019 Highlights
€ millions 1.9%
1.7%
1.6%
1.2%
160
1.0%
205
176
125
105 123
51 54 14
30
H1 2015 H1 2016 H1 2017 H1 2018 H1 2019
Free Cash Flow Capex Capex to Sales
30 June 14, 2019 – London Investor Presentation * Please refer to Appendices for Alternative Performance Measures definitionsROBUST BALANCE SHEET AND RATIOS
First Half Fiscal 2019 Highlights
€ millions FEBRUARY 28, 2019 FEBRUARY 28, 2018 FEBRUARY 28, 2019 FEBRUARY 28, 2018
Non-current assets 9,147 7,981 Shareholders’ equity 3,9992 3,343
Current assets
5,581 5,207 Non-controlling interests 46 34
excluding cash
Restricted cash
577 495 Non-current liabilities 4,615 3,956
Benefits & Rewards
Financial assets
458 465 Current liabilities 9,055 8,335
Benefits & Rewards
Cash 1,950 1,519
TOTAL ASSETS 17,714 15,668 TOTAL LIABILITIES & EQUITY 17,714 15,668
Gross borrowings 4,753 4,062
Net debt 1,839 1,663
Operating cash totaled €2,914 million1, Gearing ratio 45% 49%
of which €2,171 million related to
Benefits and Rewards Services Net debt ratio 1.3 1.1
(net debt/EBITDA)
1 Cash – Bank overdrafts of €72m + Financial assets related to BRS activity
2 The main impact of IFRS 9 concerns the reevaluation of certain financial assets. Please refer to Appendix 6 for more details
31 June 14, 2019 – London Investor Presentation * Please refer to Appendices for Alternative Performance Measures definitionsFISCAL 2019 OBJECTIVES
First Half Fiscal 2019 Highlights
▪ Growth slightly above our expectations in H1 FY19
▪ Continued growth in developing economies
but high comparable base Organic revenue growth
between 2 and 3%
▪ Improvement in North America remains challenging
▪ Some contract exits
Underlying operating
▪ Action plans delivering profit margin
▪ Productivity reinvested in growth initiatives between 5.5% and 5.7%
(excluding currency effects)
32 June 14, 2019 – London Investor Presentation * Please refer to Appendices for Alternative Performance Measures definitionsFOCUS ON GROWTH STRATEGIC AGENDA
First Half Fiscal 2019 Highlights
Corporate Services: labor productivity
Synergies benefit Consumers and Clients in France
more than compensated wage increase
▪ Clients choose Sodexo for a combined offer of On site,
Benefits & Rewards Corporate segment North America France
▪ Consumers benefit from a combined Food Services and Hourly cost +3% +2%
Meal Pass offer Hourly productivity +5% +4%
STEP tool building: 6 countries now engaged, with 20 KPIs
Building momentum by expanding offer and
Back to basics principles
bringing healthy & sustainable diets to a wider audience
▪ Unleash is building managerial capabilities to deploy STEP ▪ Opened first Crussh outlet at City, University of
Reasserting the manager role at the center of everything we do London, partnership signed for future development
Started in March ▪ Partnership with Veggie Grill, the leading US plant-
+500 completed modules so far based restaurant group to grow offer in US college
campuses
Full roll-out from May
▪ Partnership with SaladWorks, the leading US salad-
centric franchise with nearly 100 locations
33 June 14, 2019 – London Investor PresentationH1 FOCUS – HEALTH CARE IN NORTH AMERICA IMPROVING
First Half Fiscal 2019 Highlights
Contract Wins and Retention Organizational transformation Progress in H1 FY2019
▪ On track All growth KPIs improving
▪ Revamped executive leadership ▪ Business development +30bps
team focused on with14 ▪ Comparable unit growth +230bps
seasoned executives selected
▪ Client retention +240bps
for their wealth of healthcare
industry experience: +2.1% organic growth
Reestablishing operational Improvement in labor
excellence to ensure productivity:
repeatability, reliability and ▪ Average hourly revenue +5%
predictability of the outcomes
▪ Average cost of a work hour
Rebooting commercial +3.5%
expertise (Key Account, Significant improvement in
GPO Relationship, Underlying Operating Profit
Technical Sales Support)
34 June 14, 2019 – London Investor PresentationA STRONG BUSINESS MODEL
MEGA TRENDS IN OUR MARKETS
A strong business model
Environmental issues
1 Demographic Shifts
7 and scarcity of resources
2 Urbanization
8 Empowered Consumers
3 Emerging middle class
9 Disruptive Technology
4 Globalization
10 Ownership vs Right of Goods
5 Emerging markets
11 Future of Work
6 Public deficits
36 June 14, 2019 – London Investor PresentationON-SITE ADDRESSABLE MARKET OPPORTUNITIES
A strong business model
€900bn
€320bn €580bn
Total Market Food Market FM Market
Outsourcing rate: 40% 38% 42%
UK: 58%
USA: 55%
France: 44%
China: 33%
Sources: IFMA, Frost & Sullivan
37 June 14, 2019 – London Investor PresentationSIMPLIFY TO GAIN IN FOCUS AND EFFECTIVENESS
A strong business model
Optimize Redesign our “make or buy” Fit for the future
our geographic footprint approach to service
▪ Clarify where we want to be best
▪ Be fully present in up to ▪ Reinforce food DNA in class / best in cost
50 countries ▪ Redesign support functions
▪ Remain strong in integration
▪ Be active for projects to be leaner and more Site/
▪ Focus on high value Contract centric
in another 10 countries FM Services
▪ Cover the rest of the world ▪ Identify 15% savings to be
▪ Subcontract where it makes redeployed in core activities /
through partnerships sense investment for growth
and subcontracting
▪ Streamline the HQ
& Regional organizations
38 June 14, 2019 – London Investor PresentationA CASH GENERATIVE BUSINESS MODEL
A strong business model
Negative Net Assets Consistent Cash Conversion Free Cash
Excluding Goodwill Flow/Net Income
2.0 30.0%
200%
1.5 25.0% 184%
20.6%
19.7%
18.2% 18.6% 175% 165%
1.0 17.0% 17.1% 17.2% 16.4%
20.0%
15.0% 15.0% 15.4% 153%
146%
0.5 15.0% 150%
130%
0.0 10.0% 120% 123% 123%
125%
-0.5 5.0% 114% 98%
100%
-1.0 0.0% 93%
75%
-1.5 -5.0%
50%
-2.0
FY8 9 10 11 12 13 14 15 16 17 18
-10.0% FY8 9 10 11 12 13 14 15 16 17 18
BRS Net assets excluding, goodwill, customer relationships and brands in €bn
OSS Net assets excluding, goodwill, customer relationships and brands in €bn.
ROCE including goodwill
39 June 14, 2019 – London Investor PresentationBALANCED CASH ALLOCATION
A strong business model
M&A
Selective M&A:
CAPEX
▪ FCF Payback ≤ 10 years
Capex to sales at ▪ End ROCE > 15%
~ 2.5% going forward: SHAREHOLDER
RETURNS
▪ Current levels ~1.5-2%
▪ Additional IT Capex at €30 to 50m
per year
Regular Shareholder return:
▪ Centerplate ~5% ongoing
▪ Predictable dividend policy around 50%
of recurrent net income
▪ Opportunistic approach to share buybacks
40 June 14, 2019 – London Investor PresentationACQUISITION CONTRIBUTION
A strong business model
Contribution of all acquisitions*
M&A Activity in H1 FY19
to total growth
Enriching
offers in Switzerland
FY18
Strategic 2.9%
moves in Brazil
Q1FY19 H1FY19 FY19
Estimated
Consolidating
4.8% 3.7% 2 – 2.5%
positions
in the UK in France in the UK
41 June 14, 2019 – London Investor Presentation *Net of sale of activitiesA CASH GENERATIVE BUSINESS MODEL
A strong business model
Solid Debt Ratio
Net debt / EBITDA
2
0.9 1.0
1
0.6
0.5 0.5
0.4 0.4
0.3 0.3 0.3
0.2 0.2
0
FY7 8 9 10 11 12 13 14 15 16 17 18
▪ Prudent historic debt management
▪ Maintain Net Debt to EBITDA target of 1-2x pre IFRS 16
▪ Impact of IFRS 16: work in progress show impact circa €1bn of net debt* from 2020
▪ No risk on covenants
42 June 14, 2019 – London Investor Presentation *Unaudited preliminary assessment excluding concessions – IFRS 16 will only be applicable starting from FY20BREAKDOWN OF GROSS FINANCIAL DEBT: €4,753m*
A strong business model
BY CURRENCY BYBY
MATURITY (€m)
MATURITY
51% €
42% $ < 1 year 1,178
7% other
INTEREST RATE 1-6 years
1,756
21% 79%
Variable Fixed > 6 years 1,819
Blended cost of debt 2.3% at 28/02/2019
* Including commercial paper for an amount of €1,000m
NB: All data as of 28/02/2019
43 June 14, 2019 – London Investor PresentationRATING AGENCIES
A strong business model
Long term Short term Outlook
A- A-1 Stable
Key Strengths Key Risks
Leading market provider of food services, integrated Exposure to economically and geopolitically volatile countries
services, benefits and rewards, and personal home in Latin America.
services.
High revenue visibility, with recurring revenue from Exposure to fluctuations in food, commodity, and oil prices,
multiyear contracts and client retention rates above 93%. and salary inflation in emerging countries.
Strong recurring free cash flow, due to low capital intensity, Limited pricing flexibility and modest operating margins in the
structural working capital inflows, and the service-voucher onsite services business.
business’ cash float.
Exceptional liquidity and low interest costs, supported by Reliance on customer prepayments in the vouchers business.
modest financial leverage.
“The stable Outlook on Sodexo reflects our view that the Company will continue to deliver resilient operating performance in
an overall supportive economic environment. Under our base case, we expect S&P Global Ratings-adjusted funds from
operations (FFO) to debt will remain at about 40%, despite our expectation that the Company will continue acquisition
spending while maintaining shareholder remuneration levels.”
44 June 14, 2019 – London Investor PresentationTRANSACTION OVERVIEW
INDICATIVE TERMS AND CONDITIONS OF CONTEMPLATED NEW ISSUE
Transaction overview
Indicative terms and conditions of contemplated New Issue
Issuer Sodexo SA
Issuer rating A- (stable) by S&P
Issue Size GBP £250mn
Use of proceeds General corporate purpose
Issue Type Fixed, annually
Status Senior, unsecured
Tenor 9 years
Settlement date [24] June 2019
Documentation Standalone, Clean up Call 80%, 3M Par Call,
Make-whole call, COC
Law/Listing English Law, Paris Listing
Bookrunners HSBC (B&D), Santander
46 June 14, 2019 – London Investor PresentationAPPENDICES
STRONG INDEPENDENT GOVERNANCE
Sodexo at a glance
Board Audit Committee
▪ Chaired by Sophie Bellon, since 2016 Sophie Stabile, Committee Chair, Independent Director
Emmanuel Babeau, Independent Director
▪ 12 Directors, including two Employee François-Xavier Bellon
Representatives Soumitra Dutta, Independent Director
▪ Of the 10 elected Directors, 6 independent, 6 Cathy Martin, Director representing employees
women, collectively representing 3 nationalities: Nominating Committee
French, American and Indian.
Cécile Tandeau de Marsac, Committee Chair, Independent Director
▪ Luc Messier, Canadian, to be proposed to the Sophie Bellon
AGM in January 2020 as new Independent
Nathalie Bellon-Szabo
Director
Françoise Brougher, Independent Director
▪ Since January 2016, substantial renewal of
Directors and enhanced transparency Compensation Committee
Cécile Tandeau de Marsac, Committee Chair, Independent Director
Françoise Brougher, Independent Director
Philippe Besson, Director representing employees
Sophie Stabile, Independent Director
48 June 14, 2019 – London Investor PresentationAN ENGAGED COMPANY FY 18
Sodexo at a glance
14 years 69% (1) 14.6 34%(2)
As industry leader in the employee average annual hours of targeted
DJ Sustainability index engagement rate training per employee carbon reduction
80.9% 37% 60% 93.8%
employee of women on the of women on the client retention
retention rate Executive Committee Board of Directors rate
ADVOCATE FOR HEALTHY
GROW LOCALLY & INCLUSIVELY TACKLE WASTE EVERYWHERE
LIFESTYLE CHOICES
(1) 2018 employee engagement survey
(2) Absolute reduction in Scope 1, Scope 2 and Scope 3 carbon emissions, compared to a 2011 baseline
49 June 14, 2019 – London Investor PresentationREVIEW OF OPERATIONS
On-site Services
revenues
OSSON-SITE SERVICES H1 FY2019 ORGANIC GROWTH BY REGION
39 %
+3.0% of OSS
EUROPE FY18
45 % NORTH +1.2%
of OSS
FY18 AMERICA
+4.1%
+6.9%
On-site Services
Excluding North America
16 % AFRICA - ASIA - AUSTRALIA
of OSS
FY18
LATAM & MIDDLE EAST
51 June 14, 2019 – London Investor Presentation * Please refer to Appendices for Alternative Performance Measures definitions56%
BUSINESS & ADMINISTRATIONS – REVENUES On-site
Services
FY18
NON RESTATED ORGANIC GROWTH RESTATED ORGANIC GROWTH
€ millions North America
Organic +0.8%11
-1.3%
Net ▪ Solid growth in Corporate driven by strong comparable
growth acquisition 26%
unit sales and good wins
+1.2% Unfavorable
currency 5,645 ▪ Significant Energy & Resources project work in Q1 last
of FY18
effect year B&A
▪ US Marine Corps renewed with lower comparable
5,295 unit sales
+2.1%1
Europe 48%
▪ Corporate Services helped by solid same site sales
growth driven by cross-selling of FY18
▪ Easier comparable base in Govt & Agency in the UK B&A
▪ Slowdown in tourism in Q2 in France
+5.9%1 Africa, Asia, Australia, Latin America
& Middle East 26%
▪ Strong growth in Corporate driven by
new business and comparable unit sales of FY18
B&A
TOTAL ▪ End of construction projects in Energy & Resources
H1 FY 2018 H1 FY 2019
+2.8%1
52 June 14, 2019 – London Investor Presentation 1 Restated for inter-segment reclassification. Please refer to Appendices.
* Please refer to Appendices for Alternative Performance Measures definitions24%
HEALTH CARE & SENIORS – REVENUES On-site
Services
FY18
NON RESTATED ORGANIC GROWTH RESTATED ORGANIC GROWTH
Organic +1.3%1 North America
€ millions Favorable
Growth ▪ Solid comparable unit growth in Healthcare helped 63%
Net currency
effect by inflation pass-through and cross-selling
+5.6% acquisition
▪ Strong retention to date in Health Care but Seniors of FY18
Health Care
impacted by a significant loss in beginning of the year
2,552 & Seniors
2,359 +1.7%1 Europe
▪ Good growth in Benelux driven by last year wins 31%
and strong same site sales helped by cross selling
▪ Nordics still declining due to negative net lost of FY18
business Health Care
& Seniors
+16.9%1 Africa, Asia, Australia, Latin America 6%
& Middle East
▪ Double digit growth in Brazil, India and China of FY18
Health Care
& Seniors
TOTAL
H1 FY 2018 H1 FY 2019
+2.2%1
53 June 14, 2019 – London Investor Presentation 1 Restated for inter-segment reclassification. Please refer to Appendices
* Please refer to Appendices for Alternative Performance Measures definitions20%
EDUCATION – REVENUES On-site
Services
FY 18
ORGANIC GROWTH
€ millions Organic Favorable
Growth currency +1.4% North America
Net effect
▪ Neutral net new/lost business from last year 75%
+3.6% acquisition
▪ 1 less working day, more than compensated
2,420 by good retail activity in Universities of FY18
Education
and project work in Schools
2,228 +10.4% Europe
▪ Strong new business and same site sales
in France, particularly boosted 23%
by Yvelines Schools contract start-up in Q2
▪ Strong new business in the UK, of FY18
▪ +2 extra working days in Italy, Education
offset by 1 less working day in France in Q2
Africa, Asia, Australia, Latin America
+10.5% & Middle East 2%
▪ Strong growth in Schools in Asia
still driven by China, Singapore and India of FY18
Education
TOTAL
H1 FY 2018 H1 FY 2019
+3.6%
54 June 14, 2019 – London Investor Presentation * Please refer to Appendices for Alternative Performance Measures definitionsSLIGHT DECREASE IN OSS UOP MARGIN
First Half Fiscal 2019 highlights
Underlying Operating Profit Underlying Operating Margin
+1.2% At constant rates -30 bps
581
€ millions 562 5.7% 5.5%
H1 2018 H1 2019 H1 2018 H1 2019
+3.3% At current rates -20 bps
55 June 14, 2019 – London Investor Presentation * Please refer to Appendices for Alternative Performance Measures definitionsOSS UNDERLYING OPERATING PROFIT AND MARGIN BY SEGMENT
First Half Fiscal 2019 Financial Performance
Restated
H1 Variation
FY 2019 Constant rate
€205m +1.3% ▪ Weight of US Marine Corps renewal
Business &
Administration ▪ Timing disparity between productivity gains
3.6%* -30bps and investments to accelerate growth
€162m +5.8% ▪ Productivity gains secured,
Health Care deployment of new offers accelerating
& Seniors
6.3%* +20bps ▪ Inflation covered by price increases
€215m -2.0% ▪ Significant start-up costs for Yvelines Schools
Education ▪ Strikes, working days and churn in Schools
8.9%* -70bps ▪ In North America: inflation passed-through in Universities
56 June 14, 2019 – London Investor Presentation * % of revenueREVIEW OF OPERATIONS
Benefits & Rewards
Services revenues
BRSREVENUES BY SERVICE LINE
Benefits & Rewards Services
Employee Benefits Services diversification
€ millions € millions
Organic growth
+11.4%
10.5
Unfavorable
329 currency effect
341 Organic
growth
+5.0% Net acquisition
Unfavorable
84 currency effect 88
H1 FY 2018 H1 FY 2019 H1 FY 2018 H1 FY 2019
▪ Solid growth in Europe ▪ Strong double digit growth in Mobility & Expense
▪ Strong recovery in Brazil ▪ Fast development in Corporate Health & Wellness
▪ Issue volume €6.8bn, +8.1% Organic Growth ▪ Weak start to the year in Incentive & Recognition
58 June 14, 2019 – London Investor Presentation * Please refer to Appendices for Alternative Performance Measures definitionsREVENUES BY REGION
Benefits & Rewards Services
Latin America 44% 10.0
FY 18 BRS Europe, Asia, USA 56%
FY 18 BRS
€ millions revenues € millions revenues
Organic growth
+8.2% Net acquisition
Organic growth 10.5 Unfavorable
currency
+12.5% effect
244
Unfavorable
currency effect 229
184 186
H1 FY 2018 H1 FY 2019 H1 FY 2018 H1 FY 2019
▪ Strong recovery in Brazil thanks to growth ▪ Solid growth in Western Europe
in volumes, solid new business wins
▪ Double digit growth in Eastern and Southern Europe
and stabilization of interest rates
▪ Double digit growth in Mexico
59 June 14, 2019 – London Investor Presentation * Please refer to Appendices for Alternative Performance Measures definitionsREVENUES BY NATURE
Benefits & Rewards Services
OPERATING REVENUES FINANCIAL REVENUES
€ millions € millions
Organic growth
Net
+10.1% acquisition
Unfavorable
currency effect
17
377 394
36
Organic growth
36 +10.4% 36
Unfavorable
currency effect
H1 FY 2018 H1 FY 2019 H1 FY 2018 H1 FY 2019
▪ Solid growth in Western Europe, ▪ Interest rates stabilizing in Brazil
Double digit growth in Eastern and Southern Europe
▪ High interest rates in Turkey
▪ Strong recovery in Brazil
▪ High float resulting from exceptionally high business
volume in Romania in Q4 last year
60 June 14, 2019 – London Investor Presentation * Please refer to Appendices for Alternative Performance Measures definitionsIMPROVEMENT IN BRS UOP MARGIN EXCLUDING CURRENCY EFFECT
First Half Fiscal 2019 highlights
Underlying Operating Profit Underlying Operating Margin
+11.8% At constant rates +30 bps
€ millions 124 125 30.0% 29.1%
H1 2018 H1 2019 H1 2018 H1 2019
+1.0% At current rates -90 bps
61 June 14, 2019 – London Investor Presentation * Please refer to Appendices for Alternative Performance Measures definitionsH1 FISCAL 2019 EXCHANGE RATES
CLOSING CLOSING
AVERAGE AVERAGE RATE RATE RATE
1€ =
RATE AVERAGE RATE H1 FISCAL 19 REFERENCE CLOSING RATE 28/02/19 28/02/19
H1 FISCAL 19 H1 FISCAL 18 VS. H1 FISCAL 18 RATE FISCAL 18 AT 28/02/2019 VS. 31/08/18 VS. 28/02/18
1.145 1.195 +4.4% 1.193 1.142 +2.1% +6.5%
U.S. Dollar
0.887 0.885 -0.3% 0.884 0.858 +4.5% +2.9%
Pound Sterling
4.398 3.864 -12.1% 4.075 4.269 +13.8% -7.8%
Brazilian Real
Note: Reference rate Fiscal 2018 is the average rate for Fiscal year 2018, used for organic growth calculation .
62 June 14, 2019 – London Investor PresentationIFRS 9
▪ Prospective application from September 1,2018 with no restatement of prior periods
▪ First application net impact as of September 1, 2018 of €404m recorded in equity
▪ Main impact for Sodexo: Need to reevaluate at each balance sheet date some non-consolidated investments
at fair value that were previously accounted for at cost
FAIR VALUE HISTORICAL COST
€ million AT FEBRUARY 28, 2019 PRIOR TO IFRS 9 DIFFERENCE
Bellon SA stake 662 32 630
Other investments 85 27 58
▪ The difference in valuation of the Bellon SA stake of €630m is split between:
• €564m for the first application as of September 1, 2018
• €66m of change in fair value in the first-half
▪ Very limited impact from the new depreciation model on accounts receivables which is based on expected losses:
€21m additional depreciation recorded on September 1, 2018
▪ No impact from changes in hedge accounting
63 June 14, 2019 – London Investor PresentationALTERNATIVE PERFORMANCE MEASURE DEFINITIONS
Blended cost of debt of the prior fiscal year, calculated using the exchange rate for the prior fiscal
The blended cost of debt is calculated at period end and is the weighted year; and excluding the impact of business acquisitions and divestments,
blended of financing rates on borrowings, (including derivative financial as follows:
instruments) and cash pooling balances at period end.
▪ for businesses acquired (or gain of control) during the current period,
revenue generated since the acquisition date is excluded from the organic
Free cash flow
growth calculation;
Please refer to Cashflow position.
▪ for businesses acquired (or gain of control) during the prior fiscal year,
Growth excluding currency effect revenue generated during the current period up until the first anniversary
Change excluding currency effect calculated converting FY 2019 figures date of the acquisition is excluded;
at FY 2018 rates, except when significant for countries with hyperinflationary
economies. ▪ for businesses divested (or loss of control) during the prior fiscal year,
As a result, for Argentine Peso figures for H1 FY2019 and H1 FY 2018, have revenue generated in the comparative period of the prior fiscal year
been converted at the exchange rate of EUR 1 = ARS 44.045 vs. ARS until the divestment date is excluded;
44.302 for FY 2018. ▪ for businesses divested (or loss of control) during the current fiscal year,
Issue volume revenue generated in the period commencing 12 months before the
Issue volume corresponds to the total face value of service vouchers, divestment date up to the end of the comparative period of the prior
cards and digitally-delivered services issued by the Group fiscal year is excluded.
(Benefits and Rewards Services activity) for beneficiaries on behalf of clients. For countries with hyperinflationary economies all figures are converted at
the latest closing rate for both periods when the impact is significant.
Net debt
Net debt is defined as Group borrowing at the balance sheet date, less As a result, for the calculation of organic growth, Argentine Peso figures
operating cash. for H1 FY2019 and H1 FY 2018, have been converted at the exchange rate
of EUR 1 = ARS 44.045 vs. ARS 44.302 for FY 2018.
Organic growth Starting FY19 Venezuela is accounted for using the equity method.
Organic growth corresponds to the increase in revenue for a given period Consequently Venezuela is no longer in revenue.
(the "current period") compared to the revenue reported for the same period
64 June 14, 2019 – London Investor PresentationALTERNATIVE PERFORMANCE MEASURE DEFINITIONS
Underlying Operating profit Underlying Net profit per share
Operating profit excluding other operating income and other operating Underlying Net profit per share presents the Underlying net profit divided by
expenses. Other operating income and expenses include gains or losses the average number of shares
related to perimeter changes and on changes of post-employment benefits,
restructuring and rationalization costs, Acquisition related costs, amortization Underlying Net Profit
and impairment of client relationships and trademarks, impairment of Underlying Net profit presents a net income excluding significant unusual
goodwill and impairment of non-current assets. and/or infrequent elements. Therefore, it corresponds to the Net Income
Group share excluding Other Income and Expense and significant non-
Underlying Operating margin recurring elements in both Net Financial Expense and Income tax Expense.
The underlying operating profit margin corresponds to Underlying operating
profit divided by revenues In the H1 Fiscal 2019, the Underlying net profit excludes from
the Net Income Group share the following items and the related tax impact
Underlying Operating margin at constant rate where applicable.
The underlying operating profit margin at constant rate corresponds to
Underlying operating profit divided by revenues, calculated by converting H1
2019 figures at FY 2018 rates, except for countries with hyperinflationary
economies.
65 June 14, 2019 – London Investor PresentationAPM - FINANCIAL RATIOS DEFINITIONS & RECONCILIATION
H1 2019 H1 2018
Gross borrowings(1) – operating cash(2)
Gearing ratio 45% 49%
Shareholders’ equity and non-controlling interests
Gross borrowings(1) – operating cash(2)
Net debt ratio 1.3 1.1
Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA)(3)
(1) Gross borrowings
Non-current borrowings 3,576 2,978
+ current borrowings excluding overdrafts 1,189 1,095
- derivative financial instruments recognized as assets (13) (12)
4,753 4,062
(2) Operating cash
Cash and cash equivalents 1,950 1,519
+ financial assets related to the Benefits and Rewards Services activity 1,035 960
- bank overdrafts (72) (81)
2,914 2,399
(3)Earnings before
Interest, Taxes, Operating profit 1,021 1,157
Depreciation and
+ depreciation and amortization 347 296
Amortization (EBITDA)
1,368 1,453
66 June 14, 2019 – London Investor PresentationREVENUE BREAKDOWN
REVENUES BY SEGMENT RESTATED ORGANIC ORGANIC EXTERNAL CURRENCY TOTAL
(In millions of euro) H1 FY19 H1 FY18 GROWTH GROWTH GROWTH EFFECT GROWTH
Business & Administrations 5,645 5,295 +2.8% +1.2% +6.3% -0.9% +6.6%
Health Care & Seniors 2,552 2,359 +2.2%1 +5.6% +0.4% +2.1% +8.2%
Education 2,420 2,228 +3.6% +3.6% +1.8% +3.2% +8.6%
On-site Services 10,617 9,882 +2.8% +2.8% +3.9% +0.7% +7.4%
Benefits & Rewards Services 430 413 +10.1% +10.1% +0.2% -6.3% +4.1%
Elimination -2 -2
TOTAL GROUPE 11,045 10,293 +3.1% +3.1% +3.7% +0.5% +7.3%
67 June 14, 2019 – London Investor PresentationThank you
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